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Comment by pjc50 | Hacker News Reader

Argentina has 100% annual inflation and going up while the US has less than 10% and going down. The USD is not going anywhere spectacular, because there is no more stable country to flee to.

The one thing that can reliably trigger inflation in almost any country is oil/gas shortages on the global market, and you can't hedge that with precious metals nor store a 20 year supply in your house.

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>> the US has less than 10% and going down

First of all, there's no evidence it's going down. Secondly, 10% is a wild figure. That's far over the breach for the population to begin to alter their behaviour by either hoarding or spending.

My point was, the mentality of coping with even 10% inflation is very foreign to Americans. But it's a learned skill, and people will learn it. When they do, it will resemble Argentina during the 10% phases (2003-2012 for instance). That's not necessarily terrible if you're coming down from 100%, but it's a brand new experience that Americans haven't come around to.

And it does a lot of very weird things to your politics.

It makes everything more populist far-right or far-left than it would need to be otherwise. It feeds into conspiratorial thinking. It is a regressive tax.

10% is a HUGE regressive tax right now on American citizens, and it's kind of a miracle that they haven't rioted more.

> there's no evidence it's going down

https://www.statista.com/statistics/273418/unadjusted-monthl...

Prices won't go down, but the rate of change of prices can go down.

> begin to alter their behaviour by either hoarding or spending.

Median savings is not huge: https://www.usnews.com/banking/articles/the-average-savings-...

Not to mention that middle America has fixed rate 30 year mortgages, an absolutely extraordinary product that means their payments are fixed in nominal dollars for a huge length of time. So if they get a raise that keeps up with inflation, inflation actually makes them "richer".

The effects are largely dominated by gas and energy prices, which Americans really will get upset over but seem to be recovering. I don't think there's any realistic way you can prevent against 10% gas price jumps and still have a free market.

A fair amount of Americans where adults in the second half of the 1970s and early 1980s... it isn't that new of an experience for them.

You should look at inflation rates in the 70s and 80s. This didn't destroy the US, though it was painful.

Yes, it's a wild figure for the US (as a comparison, the US had an year with higher inflation than Brazil). But that lasted for a short period, and it's been measured going down.

Anyway, hoarding gold is not a natural behavior for a population at 10% inflation. It's natural for a population that distrusts the government and the financial markets. Inflation by itself pushes people into banks.

Why would inflation push people into banks? In my (EU) country, banks don’t offer anything that matches current inflation besides speculative investments.

It pushes people into high-liquidity short-term investments.

Banks are the main place you find those.

In USA at banks near me, I don't find high liquidity with decent returns. Rates on savings accounts are paltry, and CDs are only liquid if ignoring early withdraw penalties.

I use bank to accept revenue and transfer it to brokerage houses where it sits in highly liquid money market with better returns than bank savings.

> one thing that can reliably trigger inflation in almost any country is oil/gas shortages

I am convinced we are making a huge mistake by conflating shortage of raw material with general inflation.

If there was shortage of food tomorrow, the correct responce is not to raise interest rates - that would cause even greater problems and famine.

The correct responce is immediate intervention to expand supply - build greenhouses, accelerated permits, zero interest finance for agriculture, etc.

This issue will lead to disaster as climate change bites - we are only managing fictisious financial parameters and ignoring what is happening to physical atoms.

> the US has less than 10%

if you read the plea from the Argentine above.. they say "peer networks to measure value" .. it implies that the entire inflation is NOT one single number. It is in sector by sector, with local "shadows" .. In the USA, it is housing obviously in large populated areas, but also health care and the cost of a University education. Those measures have climbed triple digits while yes, petrol and candy-bars are the same.

This concept is so important, but people are so unwilling to embrace it because regime economists dismiss it as nonsense.

I don't believe you that the inflation rate for housing or education is at 100%. If you mean that there's been 100% inflation since some point in the past then, well, yes that's true but it's also true of every other good. But when we say that Argentina has 100% inflation it means that the nominal price of goods doubles every year.

> inflation rate for housing or education is at 100%.

not per year, but .. there are residential housing listings here in California that have doubled in not very long.. I think the point is, that price increases are not uniform.. and it is related to structural forces of money, as well as markets

It's not uniform. The inflation of housing prices in SF over the last decade has averaged somewhere around 6% leading to a ~100% increase, way higher than the roughly 2% average inflation. But comparing a ~100% increase over a decade to a ~100% increase over a year is very misleading

except that there are houses in other places besides San Francisco.. and that those prices have volatility not seen in San Francisco.. is there is a motivated-reason behind defending the house prices here? projecting stability ?

I was using SF because it's known to have had a much higher house price inflation than other places, in order to try to be charitable to your case. If you look at the overall US housing market then you need to go back a lot further than a decade to see 100% inflation.

actually I tracked housing prices directly here in California on a large scale.. the key to resolving the two positions here is that, volatility is exactly how a one hundred percent increase in price happens.. first drop, the rise, then drop a lot, then rise alot. Meanwhile in the most desirable a.k.a. most expensive zip codes (or similar). the rise has been steady, even at 2008, and as you say, not one hundred percent. Lastly, ordinary people like you and I are not privileged to see the vast amount of cheating that goes on with residential valuation, loans and the like. Loans for more than a realistic value on a property, are as old as Sicily.

Sectoral inflation is a real issue! But that's the one thing that buying gold can't help you with, because it necessarily means there's something different about that market rather than the money supply as a whole.

> health care and the cost of a University education

See "Baumol cost disease" - things which require highly skilled human inputs tend to get more expensive as automation makes everything else cheaper.

> Argentina has 100% annual inflation and going up while the US has less than 10% and going down.

Also, most of the world, including western Europe, has been experiencing >8% inflation rates.

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